China’s Auto Market to Grow by 20% in 2010

The automobile market in 2009 broke a long-term potential for the release of accumulated consumption. Particularly the elimination of road toll brought the great increase of the group of potential car buyers. A substantial increase in the rate of growth is so substantial to digest for the year of 2009, so the car market will continue to be booming in 2010.

Based on the increase in production capacity in the factory and the large number of potential consumers, combined with the effect of the last train for the next year to take, the growth rate of car market in 2010 is expected to be around 20%. However, it is difficult to achieve such a speed in 2011 and deceleration is inevitable.

　　A. Small-displacement cars could not escape from the tragic fate.

Small displacement cars (generally refers to model with 1.3L and smaller engines) in 2009 just kept up with the trend of the overall car market’s growth rate. However smaller vehicles have not achieved a breakthrough. This is a serious problem. Statistics from the report by the Passenger Vehicles Association shows that A-class car with 1.5-1.6L engine is marching forcefully, while low-emission vehicles with favorable conditions should unable to exceed the overall market trend. It has not yet approached make up the loss of these years and failed to become the purchase hot consistent with the promotion, which is big problem lying in popularity of private cars and energy saving.

Small-displacement market will be less optimistic in 2010, when entry-groups’ release of the intensity is less than 2009. Tax concessions are to be reduced but still effective. Short-term effects after adjustment of purchase tax in September 2008 will be weakened. New models of A-class will be under research since the large scale trend has been recognized. Price range is gradually being narrowed down. The capacity of the compact car production is gradually to be pulled up, the increase of gasoline prices, etc. All these factors are obstacles of the low-emission car market.

We do not want to see that after the share declined from 2006 to 2008 and a short break in 2009, the low-emission vehicles go on the tumble.

　　B. Hot trend of SUV will continue.

First listing of the import models-Audi Q5, will release the localization wave of luxury SUV. Guangzhou Toyota Highlander earlier did a good job and this time Audi Q5 was introduced. Both are important strategies conducted by Toyota and Volkswagen to develop domestic luxury SUV market. The effect will be very obvious, and will spur other manufacturers to introduce their advanced SUV, lowering the barriers for luxury cars to enter. China’s passenger car will be further strengthened as the core of the world.

The vehicle characteristics as well as trade disputes will have great impact on imported cars. A lot of policies will guide the import model of luxury SUV to be localized. Domestic luxury SUV will become the major passenger car market as narrow segments.

Domestic small SUV market is also undergoing a quick start. But the Chinese’ psychological fear of losing face will impose a negative impact. The gradual decrease of mass SUV in South Korea at that time is very illustration of real-time consumption.

　　C. MPV’s recovery is very difficult.

With the FAW Hainan Prima’s entry, it is positioned as functional family sedan changed from the once popular concept of 5 seats plus 2, work and life. Zhengzhou Nissan’s new discovery in Shuaike and other light commercial vehicles is faced its consumers becoming upgraded. Such transformation of MPV should be well. Its renaissance will have a good chance if accompanied with a better promotional strategies and groups of positioning.

However, the miniaturization of family in China and the high consumption patterns of families have much strong pulling force than MPV to strengthen SUV. In addition, China’s export-oriented economy stagnation adjustment process will impinge on MPV market. To sum up, the pressure is still tough for next year’s MPV.

　　D. Micro-passengers market remains hopeful.

Micro-passenger market is not fully competitive market. Pre-market low growth and the trend of the micro-car throw micro-passengers off the edge, but now it is an important market. The concept that size determines the status led the dramatic upsurge of micro-passengers. I am concerned with whether the factor of price will fully inflect when considering the potential of micro-passengers. Many of them is much expensive than QQ and F0, which is a major opportunity.

The micro-passenger market needs competitions in the future. Do not just rely on the total capacity, but the effective capacity. As competition intensifies, a lot of production capacity will become void production capacity, while market opportunities still exist. (Translator: Qinghua/ Sailor)

　　See Original Chinese Report Please Click